My grandad completely forgot he took out a lifetime mortgage

[hobbitum]

A few hours ago I didn't even know what a lifetime mortgage was and wish I didn't now!

My grandad is 90 and thought he had paid off his mortgage. He was getting annual statements that he was putting to one side and not looking at properly thinking they were just a formality.

He was informed this week a new provider was taking it over and his friend saw the letter and realised what has happened. He has made no repayments or paid off any interest for who knows how long.

My grandad doesn't remember taking this remortgage out and it now looks as if it will take his home and every penny of his when he's gone.

The more I find out the more I'm worried there is no recourse and his own awful mistake. He's devastated, completely shocked and feels a failure - I think this will seriously affect his health which is my main concern. He is of sound mind.

I don't know why I'm posting here to be honest - surely mortgage lenders should be checking in on customers like this and doing a bit more than just sending standard letters and waiting to take everything when you die? I just don't know how he could have got himself into this situation. What on Earth can I do to help?

We have around 400k equity

It sounds like it worked well for her, but what happens if the person becomes too frail to manage at home? Mine chose to go into residential care from a pleasant bungalow with wetroom and without any personal care needs because shopping was becoming a struggle, freezer meals weren’t great, home maintenance was getting beyond her ability to organise and she was terrified of security and being scammed as lived alone.

My DM is in a similar position but has no equity.

She doesn’t meet the criteria for Social Care and doesn’t have the funds for Private.

The decent ones around here want tou to have access to at least £150k so she’s stuck and very vocal about just how miserable she is.

@BunnyRuddington that’s the worst of all worlds!!

As this thread has been revived (with some more useful info, thanks pps), I can update but haven’t got very far really.

The LPA I had in place was a joint one with an uncontactable family member - tried to remove them - wasn’t allowed - had to start all over again with a new one. That all took a long time, and with other things to focus on I haven’t picked this up again yet.

My main concern now is checking this is covered by the negative equity guarantee to see if the lender will take anything else from him (or by extension me) but the flat. If we can draw a line under it there, that would be the ideal.

His annual mortgage statement dropped recently with another £10k or so increasing the absurd amount of negative equity he is in - more than the cost of the flat now.

On principle it is worth trying to establish if it was mis-sold - the lifetime mortgage was taken out by both my grandparents when they were in sound mind and actually running a business, well before retirement - there’s no way this was the right product for them if they needed a loan, and the paperwork showed the future value of their flat was grossly overestimated to get it over the line. It looks dodgy to me, but the time and effort to trace something so far back (25 years or so), when brokers/ lawyers whatever are dead or long retired, seems a slog. I don’t know who could actually be held accountable after all this time.

As for my concerns about my grandad’s mental health, he’s getting forgetful these days and it’s not something that has really stayed at the forefront of his mind, he certainly hasn’t got upset about it again following the initial shock. He’s got a home and hopefully all we’ll have to do is just let them have it when he’s gone and that will be the end of it. Sorry this got long!

It was me who revived it!! The negative equity clause is really important as mostly there will be a difference between house value and what's 'owed' and I think (not an expert, just what I've read) these started maybe 20?years ago, so it could be that he has that.

She'd have had to sell the house and use her half of the equity for care home fees until it ran out. I don't know if the sort of equity release Mum did is still available, she had a fixed sum in return for 50% of the equity when the house was sold.

Mum was only 67 when Dad died and it really was the best/only option for her at the time. She had a 2 bed semi so not much room for downsizing and if she'd gone to a retirement flat she'd have had to give up her pets and her garden. It was also the home she'd lived in since she married my Dad. I always said she'd be there until they carried her out and she literally was.

There are nowadays all kinds of different products including ones where you pay the interest . So if someone has an ok pension but no access to lump sums, they can opt for a lump sum to maybe do a bit of renovation to keep the place nice or adapt , be able to go on holiday every year , give a helping hand to an adult child or grandchild and pay £200 to £600 a month interest depending on what they took out ( I’ve allowed for anything between £30 k and £100k on those figures) - there are ones where you have a ‘pot’ allocated- so just draw down on it like a private pension and only pay interest on what you’ve used or don’t pay interest at all, but it gets added on and obviously compound interest - I think if you are 72 plus and have a lot of equity it can work well but far too many use it early 60s to retire early, go mad and use it all up like it’s lottery win and then end up with no equity at all later in old age and then say it’s an awful scheme - or their family do who were expecting to inherit. .

I don’t really understand this.

He was in sound mind at the time he took out the equity release and signed the forms willingly. At the time they probably wanted extra cash for holidays, maybe a new car etc - these things he has now forgotten.

He then at some point stopped opening letters that came from the company. He wouldn’t have forgotten the equity release if he had never made the decision to stop opening the letters. Maybe they became uncomfortable for him to see.

To your knowledge, they didn’t even discuss the equity release with those that it potentially affected re future inheritance.

Sorry but your grandparents did a thing that was selfish according to some viewpoints ( others will say it was up to them). I wouldn’t feel that sorry for him shedding a few tears over it now, personally. Seems like he got over his upset, anyway.

To your knowledge, they didn’t even discuss the equity release with those that it potentially affected re future inheritance.

No one is entitled to inheritance. I had to be made aware when DM did her equity release as I still lived there at the time but if I hadn't she didn't have to tell me.

What? But this isn’t the case at all?

Dreadful, misguided advice.

No your mother wouldn’t have been forced to tell you.

But these days it is a requirement of the professional advice that people get when considering equity release schemes that they are strongly advised to inform all relevant parties (mainly your children who could reasonably assume they may inherit the house one day if it’s not sold to pay for care home fees).

I have no idea why this zombie thread has been resurrected and I'm not re-reading the whole of it.

But I have no idea why this is "dreadful, misguided advice". There is nothing that can be done now about what happened in the past. Would it be better for OP to tell her grandad that he is a total idiot, and has ruined her life by his actions as she was relying on the inheritance, with the knock on impact on his health she seems to think this will cause?
Depends whether OP really just is a money grabber or actually cares about her relative.